diff --git a/railties/lib/rails/generators/rails/app/templates/config/initializers/assets.rb.tt b/railties/lib/rails/generators/rails/app/templates/config/initializers/assets.rb.tt
index 2318cf59ffd4020a7f42a3b0f72f04c2a6d6ca32..1ba182e56235e4a3cce190cf598b8bee97c2788c 100644
--- a/railties/lib/rails/generators/rails/app/templates/config/initializers/assets.rb.tt
+++ b/railties/lib/rails/generators/rails/app/templates/config/initializers/assets.rb.tt
@@ -5,6 +5,10 @@ Rails.application.config.assets.version = '1.0'
 
 # Add additional assets to the asset load path
 # Rails.application.config.assets.paths << Emoji.images_path
+<%- if options[:yarn] -%>
+# Add Yarn node_modules folder to the asset load path.
+Rails.application.config.assets.paths << Rails.root.join('node_modules')
+<%- end -%>
 
 # Precompile additional assets.
 # application.js, application.css, and all non-JS/CSS in the app/assets
diff --git a/railties/test/generators/app_generator_test.rb b/railties/test/generators/app_generator_test.rb
index f673058de83143f91881f779cebc30b8db6d79ce..d7b682c5a91d595284204ad8eee41b16ded5dc9b 100644
--- a/railties/test/generators/app_generator_test.rb
+++ b/railties/test/generators/app_generator_test.rb
@@ -497,6 +497,7 @@ def test_coffeescript_is_skipped_if_required
   def test_generator_if_yarn_option_is_given
     run_generator([destination_root, "--yarn"])
     assert_file "package.json", /dependencies/
+    assert_file "config/initializers/assets.rb", /node_modules/
   end
 
   def test_inclusion_of_jbuilder